2019 Year End Tax Planning for Business and Individuals
With the 2017 Tax Cuts and Jobs Act (TCJA) changing the playing field in the tax realm, there are several approaches you may want to consider before year-end to help minimize your tax burden. Below are some of the most frequent that individuals and businesses should consider. Note that every taxpayer’s situation is different, so contact your BMF Advisor to help evaluate your position so you can decide the best moves for your situation.
With so many changes in the tax law, it is strongly recommended to have a tax plan in place. Even though most laws are the same for 2019 as they were for 2018, your income and deductions may have changed which will make your tax results very different. The best way to start is by identifying any changes in your personal tax situation.
Businesses were greatly impacted by the TCJA. While the rules for 2019 are the same as in 2018, it is imperative that the TCJA rules are part of your tax plan. Failure to do so can result in needless additional taxes. Corporate tax rates were cut to a flat 21% (previously 35%), and the addition of the QBI deduction (20% business income deduction) for other taxpayers (noted above) is the most profound. Is your structure the most optimal under the new rules? The TCJA also expanded the small business gross receipts threshold to $25 million, which allows businesses to elect or remain eligible for various accounting methods, such as utilizing the cash method of accounting and treating inventory as non-incidental materials and supplies, or to avoid the uniform capitalization rules for resellers and manufacturers. Your business’ taxable income could be much lower under the cash method of accounting or through various other method changes allowed for small businesses.
These are some of the year-end approaches that can be taken to help minimize your tax burden. We can help tailor a customized plan that will work best for your tax planning goals. Additional ideas and information may be found in our 2019 Tax Planning Guide.
Please contact your BMF Tax Advisor if you would like to review any of the items mentioned, schedule a tax planning strategy session or discuss potential implications of the various tax law changes.
Cindy H. Mitchell?>
Michael A. Hydell?>
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